Eagerly Anticipated IPOs: Arm, Discord, and Instacart Boost Market Outlook for IPOs in 2023
The IPO market in 2023 is showing promising signs of growth, thanks to highly anticipated offerings from companies such as Arm, Discord, and Instacart. These companies have attracted significant attention from investors, boosting the overall outlook for IPOs this year.
One example of a successful IPO is Israel-based Oddity Tech Ltd., which recently went public on July 19. The company, known for marketing beauty products under the Il Makiage and Spoiled Child brands, saw its shares close at a market value close to $2.7 billion on the first day of trading. This successful debut, coupled with the strong performance of other recent IPOs like Cava Group, has analysts predicting a resurgence in the IPO market during the second half of the year.
So, why are shares of a makeup company skyrocketing? The answer lies in Oddity Tech’s innovative use of artificial intelligence (AI). Founded in 2018 by siblings Oran Holtzman and Shiran Holtzman Erel, Oddity Tech has leveraged data and AI to create personalized product recommendations, aiming to replace traditional in-store experiences. Unlike other direct-to-consumer retailers that have gone public in recent years, Oddity Tech has not only achieved growth but also profitability. The company has posted profits for three consecutive years, with impressive earnings and revenue growth rates.
This positive momentum in the IPO market is supported by several factors. The improved stock market conditions, along with the easing of inflation and a pause in rate hikes, have attracted new companies back to the public markets. Renaissance Capital, an IPO researcher, expects a steady rise in listings during the second half of the year, pointing to a pickup in larger deals and improving returns.
Looking ahead, several highly anticipated IPOs are on the horizon for 2023. These include U.K.-based chip designer Arm, which could go public as soon as mid-September, potentially raising over $10 billion and surpassing a valuation of $50 billion. Other companies generating excitement include communications app Discord, electric vehicle startup Vinfast, grocery ordering and delivery service Instacart, car-sharing service Turo, footwear maker Birkenstock, and marketing-automation service Klaviyo.
It is noteworthy that some high-profile companies, like Stripe and Reddit, have temporarily deferred their IPO plans. However, private equity and venture capital backers will likely seek an exit via an IPO in the future.
Institutional investors, often early buyers of IPO shares, are attracted to the long-term profit potential these offerings present. While analysts don’t expect 2023 to resemble the IPO market of 2020 and 2021, which experienced a surge of interest due to low-interest rates, they anticipate a better performance compared to 2022. This positive trend in the IPO market could lay the foundation for further growth in the coming years.
In conclusion, the eagerly anticipated IPOs of companies like Arm, Discord, and Instacart, coupled with the successful performance of recent offerings, are boosting the market outlook for IPOs in 2023. With innovative technologies and profitable business models, these companies are attracting significant investor interest. The second half of the year is poised for increased IPO activity, supported by favorable market conditions and the potential for larger deals. While the IPO market in 2023 might not reach the explosive levels seen in previous years, it is expected to outperform 2022 and set the stage for continued growth in the future.
